You're Probably Getting Screwed by Stock Buybacks

In January, we saw tech layoffs from Paypal, IBM, Intel, Spotify, Google, Microsoft, Amazon, Salesforce and more…

At the same time, American corporations authorized a record $132 Billion in stock buybacks, more than tripling what we saw a year ago!

That has become a recent theme: layoffs and stock buybacks.

COURIER @CourierNewsroom

Instead of investing in workers, too many American corporations prioritize kick-backs for their Wall Street investors. @JDScholten breaks down how you’re probably getting screwed by corporate greed — again.

Facebook’s parent company Meta laid off 13% of its staff, or more than 11,000 employees late last fall. Earlier this month, they announced a $40 billion stock buyback!

Dell laid off 6,650 workers, or 5% of its workforce last week, but over the last 2 years, Dell authorized $5 billion in stock buybacks.  

According to best-selling author and podcaster Adam Grant, mass layoffs are counterproductive. And that hundreds of studies show firms that downsize end up being less profitable than peers that find other ways to lower costs, like executive pay cuts.

Currently, for corporate executives the majority of their compensation comes from stock options and stock awards. When they use open-market repurchases, it manipulates their companies’ stock prices to their own benefit. Often making a ton of money for investment bankers, hedge fund managers and corporate executives at the cost of workers, shareholders and more.

The growing use of stock buybacks since the mid-1980s has warped the economy, worsening inequality, distorting corporate decision making and diverting resources from investment in employees and hard assets.

And think about this: Norfolk Southern, the company whose train derailed in Ohio and unleashed chemicals, made a record $12 billion in revenue last year. Instead of investing in better safety measures, what did the company do? It authorized a $10 billion stock buyback.

Overall, the underlying problem with corporate buybacks and their obsession with stock-price performance is that it makes U.S. households more vulnerable to the boom-and-bust economy.

In the State of the Union, President Biden’s call for quadrupling the tax on corporate stock buybacks is good.

But banning buybacks done as open-market repurchases is better, just like it was before 1982.

YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:

IRS

In actual good news: after being funded by the Inflation Reduction Act, the IRS has hired 5,000 employees. As a result, phone calls from taxpayers are being answered at 90%, compared to 13% a year ago!

SHELL’S PROFITS

Sophia Kianni @SophiaKianni

You could have made $20 million per year since Jesus was born and still not make the profits Shell did last year

JUNK FEES

The bad news: with some companies, if you switch your internet, cable, or cell phone plan you might have to pay an early termination penalty. 

The good news: President Biden wants to pass the Junk Fee Protection Act that would help put a stop to some of the most frustrating charges Americans face.

HEALTHCARE

trash jones @jzux

the american healthcare system is actually perfect if you’re a healthy person with no teeth or eyes

BEFORE YOU GO

Before you go, I need two things from you: 1) if you like something, please share it on social media or the next time you have coffee with a friend. 2) Ideas, if you have any ideas for future newsletter content please comment below. Thank you.

Standing Tall for All,

J.D. Scholten

---